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Rail News Home Federal Legislation & Regulation

5/4/2012



Rail News: Federal Legislation & Regulation

CTA boosts price index component of CN's, CP's grain revenue cap


The Canadian Transportation Agency (CTA) recently announced a 9.5 percent increase in the Volume-Related Composite Price Index (VRCPI) that’s used to determine CN’s and Canadian Pacific’s revenue caps for moving western grain. The decision sets the index for the 2012-13 crop year, which begins Aug. 1.

Essentially an inflation factor, the VRCPI reflects a composite of the forecasted prices for rail labor, fuel, materials and capital purchases, according to the CTA. The index is one of numerous factors included in a formula the agency uses to calculate the Class Is' revenue caps.

The latest VRCPI determination reflects the impacts of recent CTA decisions on methodologies it will use to determine the cost of capital and recognize pension costs for multi-year averaging in the labor price index.

“As a regulatory body, the agency considers it good practice to periodically undertake substantial reviews of the methodologies it uses in order to ensure a robust and current approach,” said CTA Chairman Geoff Hare in a prepared statement.

From 2009 into 2012, CN and CP collectively made voluntary contributions of about $2.9 billion into their pension funds, CTA officials said.


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